Bad Credit? Try a Credit Union
Why Try a Credit Union?
A credit union is just as safe for your money as a bank is. Community banks are included in this discussion since they are the same for all practical purposes. All credit union savings are insured by the US government agency called the National Credit Union Agency in an amount up to $250,000.00. Since they are non profit you are a member not a customer. If you are worried about fitting into a small class of people that they serve you will find that most have a broader base than you might think. They are not just for a special class of people for the most part. Joining may require opening a savings account with a small minimum balance as well as a checking account.
Some Advantages for Those who Try a Credit Union
Sometimes there are real advantages to the consumer who decides to try a credit union account. The credit union is a smaller independent business unlike most of the banks you would deal with. Those who try a credit union know they are a bigger fish in a smaller pond. Interest rates on car loans and other forms of credit are usually lower than banks offer. They often pay higher interest on savings. Actually it’s hard to think of any disadvantages or reasons not to try a credit union. If you are worried about less access to ATMs you will find that credit unions have access to a big network of machines for surcharge-free usage. However a recent ATM withdrawal at a bank cost me $4.50…$3.00 for the use of the ATM and $1.50 for the bank! Ouch. Recent news reports show this is right near the national average of $4.35 for out of network ATM usage. In a vicious circle banks are raising fees to compensate for consumers who are getting smarter about planning ahead regarding ATM use. The lesson here is plan ahead for your cash needs. Alternatively you can ask for cash back when you use your debit card.
Credit Unions are Great for Small Businesses
A small businessman needs to establish a personal relationship with a banker. It’s usually easier to do this with a credit union. The credit union may be more creative in working with you through those pesky cash flow problems. When it’s time to expand you will be glad you decided to try a credit union. It helps if they know your business in a way that doesn’t always show up on paper. Seasonal cash flow issues are an example of the help that a banker’s personal knowledge of your business will give.
Credit Unions may be more willing to work with members that have checkered credit histories. Offerings vary but they are more likely to offer free credit counseling or have products designed to encourage people to try a credit union that have poor credit histories. Many even consider alternative more lenient credit scores than FICO.
Some have what they call credit builder or rebuilder loans which may be structured with a built in saver component. These help a person to build up funds that can act as partial collateral for a line of credit. This will roundout your “mix of credit” component in your credit score.